Groupon Faces Many Competitors in China Market

Groupon and Tencent partner to launch 'Gaopeng' in Beijing and Shanghai initially.

Hong Kong– Groupon has partnered with one of China’s largest Internet companies, Tencent, to launch Gaopeng, a group-buying portal offering daily deals in Beijing and Shanghai initially, with plans to expand into nine other major cities in the country.

Groupon, Tencent Collaboration Fund, and private equity firm Yunfeng Capital will fund Gaopeng, which is headed by Yun Ouyang, former vice general manager, strategy development at Tencent.

Tencent is not the first Internet firm to leverage its massive user base to roll out a group purchasing site. Oak Pacific Interactive, which owns one of China’s largest social network sites, RenRen, launched Nuomi last June to tap the social network’s more than 150 million registered users. And Taobao, China’s largest online e-commerce store, launched JuHuaSuan last March, aggregating the top 10 group purchasing sites in the country to its 370 million registered users.

Apart from large Internet companies, even global media agencies like Mediabrands want to be part of the game.

Jimmy Poon, CEO of Mediabrands Ventures, said group buying will have an impact on advertising activities in China as well as the sales and business processes for companies.

He revealed the agency has plans to invest in a group purchase site to understand and be part of the ecosystem.

Charles Liao, global strategic operations manager at Jigocity, which has presence in seven markets in Asia and Brazil, said the entrance of GaoPeng will drive more consumers to use these sites.

He added that while group buying is catching on in China, it is a fragmented market and group-buying sites will gain visibility with offline and online advertising.

Indeed, Nuomi has spent more than US$30 million on TV and outdoor advertising to promote its brand in the country in February this year.

Lashou, another large group buying site, recently hired OMD in a multi-million dollar deal to manage its media planning and buying business while Meituan, a well known domestic group buying site, plans to spend close to US$20 million in advertising as well.

While one estimate puts the number of Chinese Internet collective buying sites at 2,600 at the end of 2010, Millward Brown cites a more conservative figure at 500.

In China, the closest Groupon clone is also called Groupon and offers deals in more than 360 cities in the country.

Yahoo Deals

With all the buzz in group buying, Yahoo Hong Kong revealed it is in discussions with several group buying sites in the city to consolidate various deals on Yahoo’s portal. Yahoo’s ad sales will also partner with existing advertisers for the initiative that will debut in June.

In Southeast Asia, Yahoo partnered with local social buying sites in Singapore, Malaysia, Philippines, Vietnam and Thailand to offer its user base travel, lifestyle and dining promotions.

Yahoo Deals is located on the left navigation bar of its home page across the five countries.

Find more news and analysis about China and other Asia markets on ClickZ Asia.

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ABOUT THE AUTHOR

Adaline Lau, ClickZ Asia editor, oversees day-to-day editorial operations covering digital marketing from search to social media, mobile to analytics in the region. Before ClickZ, she was senior reporter at Marketing Magazine and has worked as a journalist for The Singapore Marketer and Asia Pacific Broadcasting. Connect with her @adalinelau or Google+.

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